Regular readers of the blog know that one of the ways I generate extra income is by renting out my basement, something that is usually a quick and painless way to minimize housing costs. I love the idea so much that I specifically bought my house with the basement suite already set up back in July of 2008. My specific repair costs for 2010 have totalled about a hundred bucks. While the tenant does use a little extra power and water, for the most part renting out space is pure profit.
Many people just can’t get past the sharing space with someone aspect of the arrangement. If that’s you, no matter how much separation you get from the tenant, it won’t be enough. If the idea of a stranger (at least at first) living beneath you freaks you out then no amount of money can make the living arrangement worthwhile.
If you’ve made it this far into the post then chances are you’re at least somewhat interested in the concept. In Canada, basement suites are all over the place. This article estimates there are 50,000 “secondary suites” in Calgary alone. In Vancouver there are easily double that number. Basement suites are starting to become more and more popular in places like Edmonton and Saskatoon as well.
Affordable housing is a legitimate problem in most major Canadian cities. Oftentimes basement suites are cheaper than similar sized apartments, making them a great option for students or recent graduates. Since utilities are seldom separated out from rent, the simplicity of one payment appeals to a prospective renter.
If you’re looking to rent out your basement suite or you’re curious about the idea, consider these tips: (These are for you, Young And Thrifty!)
First Off, Make Sure It’s Legal
In many Canadian municipalities, most basement suites are illegal. If you’re thinking of buying a property that isn’t zoned correctly for a legal suite be aware that you’re in danger at any point to be shut down. What usually happens is an angry neighbour phones the city, complaining about the suite. Many people rent out non-conforming suites and don’t have a minute’s trouble, but be aware that if your suite is illegal then you could be shut down.
For those of you in Vancouver, the good news is pretty much any basement suite is legal. Vancouver gets it, at least with basement suites.
Include Lots of Goodies
I make sure to include all utilities, along with satellite t.v. and wi-fi in my rent. If you already have these things, your extra cost is only going to be an extra satellite receiver and $5 a month on your t.v. bill for having it. By keeping rent simple the landlord creates one less thing for the tenant to complain about. Just make sure your tenant can’t order adult movies using just the receiver! (Unless you’re into watching porn with your tenant…)
Craigslist and Kijiji Are Your Friends
For the most part, basement suites will appeal to young people. Usually these people are only a few years removed from living in their parent’s basement, so they tend to be pretty comfortable with underground living. These people don’t look in the newspaper for places to rent. I live in a small town, a town where the newspaper dominates the rental market advertising. Yet when I post my place in both the paper and Kijiji, I get just as many emails from online as I do phone calls from the paper. Make sure to post pictures, tenants just won’t inquire on a place without them.
Commit To Doing Things Right
I know that sometimes I get a little lax in doing my paperwork since I have the security in knowing that if I ever have a problem with my tenant I can just go down the stairs and talk to them. You have to treat renting your basement just the same as renting any other house. A proper lease and inspection reports are essential. Before you take the step of accepting any tenant, take 10 minutes and talk to them. Get them to fill out an application form. References are a must, but not for reasons you think. I never call references- after all, would anyone list a reference that would give a bad review? Instead, sit on those references just in case you have to put pressure on your tenant to pay.
Don’t Be Scared Of Extra Fees
I charge all my tenants a $5.00 penalty per day for late rent and $30.00 for NSF cheques. I also charge a $50.00 fee for getting their carpets cleaned professionally after their stay, taken off their security deposit. These fees are completely at the landlord’s discretion, so don’t be a jerk about things. If your tenant pays their rent on the second of the month, don’t charge them an extra $5.00. If they start paying consistently on the 9th or so, then maybe.
Know The Laws
The Residential Tenancies Act (In Alberta anyway) governs all tenant/landlord relations. You’ll want to print out a copy of your province’s Act and spend some intimate time with it. By the time you’re done with it you should know it cold. A tenant has certain rights, so does the landlord. It’s in everybody’s best interest to follow the rules. You should also be aware of what the process is to kick out non-paying tenants, since tenants who don’t pay the rent are a bit of a buzz kill.
Don’t Be An Ass
Nobody wants to live in the same house as Hitler the landlord. Having house rules is essential, however be ready to pick your battles. And more importantly, say hi to your tenant when you run into them. Ask them how things are and make sure they know their feedback is important. Keeping the lines of communication open with your tenant will save you money in the long run. And maybe you’ll even make a new friend.
One Last Thing
At some point, you will hear one of your tenants having sex. It will be awkward the next time you talk to them, without even mentioning the sex. Try and act surprised when this happens.